UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): May 10, 2018

 

 

KEY ENERGY SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware   001-08038   04-2648081

(State or other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

1301 McKinney Street, Suite 1800

Houston, Texas 77010

(Address of principal executive offices and Zip Code)

713-651-4300

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

 

 

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 10, 2018, Robert Drummond notified Key Energy Services, Inc. (the “Company”) that he was resigning as President and Chief Executive Officer of the Company. Mr. Drummond’s resignation is effective as of May 11, 2018 (the “ Employment Termination Date ”).

On May 11, 2018, the Board of Directors of the Company appointed J. Marshall Dodson, the Company’s current Senior Vice President, Chief Financial Officer and Treasurer, as Interim Chief Executive Officer of the Company, effective May 11, 2018. Mr. Dodson is expected to serve as the Interim Chief Executive Officer until the Company completes its search process for a successor Chief Executive Officer. Mr. Dodson will continue to fulfill his responsibilities as Senior Vice President, Chief Financial Officer and Treasurer during the interim period.

Mr. Dodson, age 47, has served as the Company’s Senior Vice President and Chief Financial Officer since 2013. Mr. Dodson joined the Company as Vice President and Chief Accounting Officer on August 22, 2005 and served in that capacity until being appointed Vice President and Treasurer on June 8, 2009. From February 6, 2009, until March 26, 2009, Mr. Dodson served in the additional capacity as interim principal financial officer. Prior to joining the Company, Mr. Dodson served in various capacities at Dynegy, Inc., an electric energy production and services company, from 2002 to August 2005, most recently serving as Managing Director and Controller, Dynegy Generation since 2003. Mr. Dodson started his career with Arthur Andersen LLP in Houston, Texas in 1993, serving most recently as a senior manager prior to joining Dynegy, Inc. Mr. Dodson received a BBA from the University of Texas at Austin in 1993. Mr. Dodson also serves as a director for Enduro Resource Partners LLC, a private exploration and production company.

There are no transactions between Mr. Dodson and the Company that would be required to be reported under Item 404(a) of Regulation S-K.

In connection with Mr. Drummond’s resignation, on May 15, 2018, the Company entered into a letter agreement with Mr. Drummond (the “ Agreement ”) memorializing the terms of Mr. Drummond’s resignation as an employee and officer of the Company. The Agreement provides that (i) following the Employment Termination Date, Mr. Drummond will remain on the Company’s Board of Directors until such date as determined by the Board in its sole discretion, (ii) he will be eligible to receive the same cash compensation for his Board service as is paid to other non-employee directors, prorated for the period of his service as a non-employee director, (iii) his unvested time-based and performance-based restricted stock units are forfeited as of the Employment Termination Date and any of his equity-based awards that were vested as of the Employment Termination Date will continue to be subject to their applicable terms and conditions, (iv) Mr. Drummond will have 90 days following the Employment Termination Date to exercise his vested stock options in accordance with their terms, (v) he will receive payment for base salary, unused vacation and unreimbursed expenses, in each case, to the extent accrued or incurred prior to the Employment Termination Date, and (vi) due to Mr. Drummond’s resignation, he will not be entitled to receive any severance benefits under his existing

employment agreement or otherwise. The Agreement further includes an acknowledgement that Mr. Drummond’s existing confidentiality, non-competition and non-solicitation obligations continue to apply in accordance with their terms after the Employment Termination Date.

The foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

A copy of the press release announcing Mr. Drummond’s resignation and Mr. Dodson’s appointment is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

10.1    Letter Agreement, dated as of May 15, 2018, between the Company and Robert Drummond.
99.1    Press release dated May 14, 2018.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    KEY ENERGY SERVICES, INC.
Date: May 15, 2018     By:   /s/ Katherine I. Hargis
      Katherine I. Hargis
      Senior Vice President, General Counsel and Secretary

Exhibit 10.1

May 15, 2018

Robert Drummond

3027 Preakness Court

Richmond, TX 77406

Dear Robert:

This letter memorializes the terms of your resignation as an employee and officer of Key Energy Services, Inc. (the “ Company ”), effective May 11, 2018 (the “ Employment Termination Date ”).

The Company hereby accepts your resignation as an employee and officer of the Company and waives the ninety (90) day notice period required under Section 5(c) of your Amended and Restated Employment Agreement, dated April 2016, between you and the Company and Key Energy Services, LLC (the “ Employment Agreement ”).

You and the Company hereby agree and acknowledge that, notwithstanding anything in your employment agreement or any equity-based award agreement to the contrary, effective as of the Employment Termination Date, (i) you shall continue to serve as a member of the Company’s board of directors (the “ Board ”) until such date as determined by the Board in its sole discretion, (ii) you shall be eligible to receive the same cash compensation for your Board service following the Employment Termination Date as is paid to other non-employee directors of the Board, provided that your 2018 Board compensation shall be prorated for the portion of the 2018 calendar year following the Employment Termination Date that you serve as a non-employee director, (iii) your unvested time-based and performance-based restricted stock units shall be forfeited as of the Employment Termination Date and any of your equity-based awards that are vested as of the Employment Termination Date shall continue to be subject to their applicable terms and conditions, (iv) you will have ninety (90) days following the Employment Termination Date to exercise your vested stock options in accordance with their terms, (v) in accordance with Section 5(g) of your Employment Agreement, within ten (10) days following the Employment Termination Date, the Company shall pay you any unpaid portion of your base salary through the Employment Termination Date, any accrued but unused vacation and any amounts for expense reimbursement and similar items that have been properly incurred prior to the Employment Termination Date in accordance with your Employment Agreement but not yet been paid, and (vi) due to your resignation, you will not be entitled to receive any severance benefits under your Employment Agreement or otherwise.

You further hereby agree and acknowledge that your confidentiality, non-competition and non-solicitation obligations under your Employment Agreement and any applicable equity-based award agreements continue to apply in accordance with their terms after the Employment Termination Date.

Except as set forth in this letter, the terms of your Employment Agreement and equity-based award agreements continue in full force and effect and are reaffirmed in all respects.

To indicate your agreement with the foregoing, please sign and return this letter, which will become a binding agreement on our receipt.

 

Very truly yours,

 

KEY ENERGY SERVICES, Inc.

By:   /s/ Marshall Dodson
  Marshall Dodson
  Senior Vice President, Interim Chief Executive Officer and Chief Financial Officer

 

AGREED AND ACKNOWLEDGED:
/s/ Robert Drummond
Robert Drummond

Date: May 15, 2018

 

2

Exhibit 99.1

 

LOGO   

Key Energy Services, Inc.

1301 McKinney Street

Suite 1800

Houston, TX 77010

  

May 14, 2018

 

Contact:

Marshall Dodson

713-651-4403

FOR IMMEDIATE RELEASE

Key Energy Services Announces Chief Executive Officer Resignation and

Appoints Interim Chief Executive Officer

HOUSTON, TX, May 14, 2018 —Key Energy Services, Inc. (“Key” or the “Company”) announced today that President and Chief Executive Officer Robert Drummond notified the Company of his decision to resign from his role as CEO to pursue another opportunity effective May 11, 2018. While Mr. Drummond was prepared to continue in his position for 90 days, the Board has determined to name Key’s current Senior Vice President and Chief Financial Officer, Marshall Dodson, as interim CEO. Mr. Dodson will continue to fulfill his current responsibilities during the interim period. Mr. Drummond will continue to remain on Key’s Board of Directors. Key will be engaging an executive search firm to conduct a comprehensive search for its next CEO.

Key’s Chairman of the Board of Directors, Phillip Norment, stated “Robert has led the Company through several challenging years and has positioned Key for success and growth in the future. We would like to thank Robert for his leadership and service to Key and appreciate his desire to play a continued role as a Director. We wish him the best in his future endeavors. We are also pleased that Marshall Dodson has agreed to serve as interim CEO during this important time to provide continued leadership and a seamless transition.”

Robert Drummond, a Key Director and former Chief Executive Officer stated “I believe Key is on the right path and have confidence in the team at Key to continue growing the business. While I have decided to leave the Company to pursue another opportunity, I believe Key’s Board of Directors, the management team, and the men and women delivering exceptional service to Key’s customers every day will continue to drive the Company’s progress in achieving our goals.”

About Key Energy Services

Key Energy Services is the largest onshore, rig-based well servicing contractor based on the number of rigs owned. Key provides a complete range of well intervention services and has operations in all major onshore oil and gas producing regions of the continental United States.